The new Federal Reserve chair, to be selected by President Donald Trump, could significantly influence monetary policy by changing the tone at the central bank, even if they lack the power to revamp operations single-handedly.

Trump has fumed publicly and privately about the central bank’s course of monetary policy under Fed Chairman Jerome Powell. Powell’s term is up in May of next year, meaning that Trump will have the opportunity to nominate a new Fed chair, who will have to be confirmed by the Senate.

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However, the new Fed chair’s ability to steer policy toward easier money, as Trump desires, will be limited to changing the discussion at the Fed and making the case public, thanks to the design of the central bank.

Congress designed the Fed to decentralize decision-making. Some of that power is given to the Fed’s board of governors, and some to the presidents of the 12 regional Fed banks, who are unelected officials.

The Fed chair also cannot change monetary policy whenever or without consensus. Instead, that is up to a 12-person board called the Federal Open Market Committee, which consists of the Fed Board of Governors and a rotation of regional Fed presidents. The FOMC decides collectively what the course of interest rate policy should be. But the Fed chair can help set the tone and messaging of the central bank.

“I think first of all, just the language that that nominee uses can provide some measure of forward guidance with respect to where they see the potential path of interest rates going,” Mark Hamrick, senior economic analyst at Bankrate, told the Washington Examiner.

Given Trump’s push for lower rates, it is expected that the new chair will guide the tone and messaging of the Fed toward a more dovish monetary policy, but whether the FOMC participants go along with that is an open question.

Powell has been quite cautious in the messaging of monetary policy, largely taking a wait-and-see stance with interest rates and emphasizing the avoidance of another wave of inflation that could be brought on by softening policy too soon.

And while Powell’s term is up in May 2026, the tone shift would likely begin earlier. Hamrick pointed out that Trump has indicated that he wants to announce his choice sooner rather than later. Trump could even announce the nominee very early, hoping to undermine Powell’s influence.

Dennis Lockhart, former president of the Federal Reserve Bank of Atlanta, told the Washington Examiner that one thing the new chair could do to sway monetary policy is change how meetings are conducted.

“For example, a chair could declare up front the direction he or she wants to go, rather than letting the discussion reveal a committee consensus,” he said over email. “This might inject a dynamic of voters seeking to avoid open defiance of the chair.”

“Manhandling the committee process would be a significant departure from Fed decision-making protocol,” Lockhart added.

The Fed typically conducts monetary policy through the FOMC’s set meetings, which meet every month or every other month. This year, there are eight meetings where the board will decide what to do with interest rates.

Trump and some in his administration have been calling for interest rate cuts immediately, which cannot be done without an emergency meeting.

Ryan Young, a senior economist at the Competitive Enterprise Institute, pointed out that the new chair would be able to call such emergency meetings.

“And I wonder, you know, one test of how much would the new chair be their own person would be if they call an emergency meeting or not or if they wait” for the next scheduled meeting, Young told the Washington Examiner.

Aside from monetary policy, the Fed chair might also try to immediately change the central bank by making staffing changes or canceling research that might be controversial. Much of that, though, would still have to go through the regional Fed banks and their presidents rather than through whoever Trump picks to lead the Fed.

“Most of these things are determined by the individual Fed branches, the regional banks, and they have a lot of leeway in deciding research policy and things like that, that the chair doesn’t really have direct control over,” Jai Kedia, an economist at the Cato Institute, told the Washington Examiner.

Still, Kedia said, that doesn’t negate the fact that the Fed conducts a lot of excess research that isn’t tightly focused on its purview of monetary policy.

“And it would be great if we could trim all of that, but that’s a conversation aside from who’s going to be elected Fed chair,” he said.

Young said that, at least for the Fed’s Board of Governors in Washington, D.C., the new Fed chair will have some discretion regarding staffing. But he expressed concerns about politics factoring into those decisions.

“But given the administration — the way it treats messengers of bad news, I can’t help but think that if a new Fed chair comes in who is pliable to the president’s wishes, that any cuts they make would be politically motivated rather than merit motivated,” Young said.

HOW A FORMER FED STAFFER GOT THE FED’S RENOVATION COST OVERRUNS ON TRUMP’S RADAR

Recently, the overwhelming majority of the FOMC has opted to hold interest rates steady, although two Fed governors dissented at the Fed’s July meeting.